alleryStart learning →A foreign currency or stock index typically provides income on which basis for forward pricing?
ADiscrete lump sum
BContinuous yield
CNo income at all
DStorage-linked income
Answer & Solution
Correct answer: B. Continuous yield
A stock pays discrete income, while an index or foreign currency is modelled with a continuous yield.
Keep practising Futures Contract
Browse all Futures Contract questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
Futures contracts are highly standardized whereas forwards:Between two parties, which risk is higher in a forward than in a futures contract?Exchange limits on position size tighten close to expiry mainly to:A mutual fund tracking the S&P 500 invests inflows quickly in stock index futures. This prBuying spot and selling forward when the forward exceeds its fair value earns:Which is a standard use of forward contracts according to finance theory?Foreign exchange forwards are usually quoted as the difference from spot in:In a currency forward, the agreed currency amounts that are specified in the contract are